Howdens continues to deliver strong growth

Howden Joinery Group Plc has announced their latest rading update for the period 17th June 2018 to 3rd November 2018 (Period 7 to Period 11).

Howdens has delivered a good trading performance, including the important October/November trading period (Period 11) and the Company remains on track to meet the Board's expectations for the full year.

Trading Update

Howdens UK depots’ total revenue for Periods 7 to 11 increased by 7.5% and by 6.1% on a like for like basis on the comparable Periods in 2017, with the increase in revenue driven mainly by volume growth. Gross margin performance during Periods 7 to 11 has developed in line with management expectations.

Business developments

Howdens expects to add a total of around 33 depots in the UK in 2018, taking the total number of depots in the UK to around 694. We now expect an incremental cost in H2 2018 resulting from the increase to our previously announced depot rollout programme.

We note that, as Period 11 in 2018 ends in early November, receipts for the period can fall into financial year 2019, which starts on 30th December 2018. As a result of these timings, we expect an additional working capital outflow at the end of financial year 2018 of up to £50m, to be collected at the start of financial year 2019.

Howdens has acquired 5.0m shares since July 2018, and a total of 12.8m shares in 2018 to date, at a cost of £62.1m. As a result, we have completed the £80m buyback programme that was announced in February 2017 and half of the £60m programme announced on 1 March 2018.

Next scheduled announcement

The Group will release its 2018 Preliminary Results on 28 February 2019.

Insight DIY Analysis & Commentary

Revenue growth of +7.5%, and +6.1% on a like for like depot basis is another strong performance. However, it is a reduction from their first half performance (+12.1% overall, +10.7% like for like), due to tougher comparisons last year. Interesting too see that the revenue increase has mainly been driven by volume growth, implying the group has not retained a significant amount of the 5% price increase implemented in April of this year. The addition of 33 new depots, bring their total numbers to 694 and continues the unstoppable expansion of the trade specialist sector including Screwfix, Toolstation, Dulux Decorator Centres and Selco.

Source: Insight DIY Team & Howdens Press Release

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